Tuesday May 6, 05:51 PM
Oil prices hit record high 122.49 dollars
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LONDON (AFP) - Oil prices spiked to a record high 122.49 dollars here on Tuesday as the market was driven by concerns over violence in key producer Nigeria and the weak US currency, analysts said.
After hitting the fresh high, New York's main oil futures contract, light sweet crude for June delivery, pulled back slightly to stand at 122.35 dollars per barrel, still up 2.34 dollars from Monday's close.
London's Brent North Sea crude for June also reached an all-time high at 120.96 dollars, before slipping back to 120.59 dollars for a gain of 2.46 dollars.
Runaway oil prices have almost doubled in the past year and have surged by more than 20 dollars since the start of 2008.
The latest record price levels beat the previous all-time highs that were set earlier Tuesday.
"Market headlines are dominated by the impact of currency fluctuations, geopolitics in the form of actual and potential threats to supply in Nigeria, Iraq and Iran, plus better-than-expected recent US economic data," said Barclays Capital analyst Kevin Norrish.
"Of these three drivers, we think it is supply losses that are the key driver at present."
Nigerian militants attacked an oil ship off the coast of the west African country and took two people hostage over the weekend.
Nigeria, Africa's largest oil producer, has seen an upsurge in violent attacks on its oil industry in the past two years.
Events surrounding Iran, the world's fourth biggest oil producer, gave added support to prices on Tuesday.
Iran said Monday it would reject any offer that violates its right to master the full nuclear fuel cycle after world powers said they had prepared a new package to end the atomic crisis.
The West fears Iran could use uranium enrichment to make atomic weapons.
Iran denies it wants to do this and insists it has a right to enrich and make nuclear fuel as a signatory to the nuclear Non-Proliferation Treaty.
Oil prices also continued to profit on Tuesday from the weak dollar, which helps boost demand for commodities priced in the US unit as they initially become cheaper for foreign buyers.
"US economic data recently has surprised to the upside, with the non-farms and unemployment data on Friday being better than expected," said Sucden analyst Michael Davies in London.
"However, many would argue that the US economic outlook remains bleak and that recent dollar strength may just be a correction."
Record (LSE: REC.L - news) -breaking oil prices have sparked widespread international concern among consumer nations.
Kuwaiti Oil Minister Mohammad al-Olaim last week said that OPEC may hold an extraordinary meeting on oil prices before a scheduled conference in September and did not appear to rule out higher production.
However, Libya's acting oil minister Chukri Ghanem recently indicated that the Organization of Petroleum Exporting Countries could not pump more crude.
On Tuesday, the Indonesian government said it was considering withdrawing from OPEC, which produces about 40 percent of the world's oil.
Indonesia is the only Southeast Asian member of the oil cartel but declining production levels have turned it into a net importer.
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